It’s a rare occurrence when in the space of a few days, the same largest shareholder in two public companies unloads a bunch of stock in both firms.
But that’s what has happened with TransForce Inc. and Saputo Inc., both of which represent substantial holdings for Montreal-based Jolina Capital Inc. And what’s more unusual about the two secondary offerings is that they were both done differently: one (the $184-million sale of TransForce shares, equal to half the stake held by Jolina) was done by way of a block trade while the other (a smaller deal) was done following the filing of a prospectus.
That difference leads to some other differences: in the first case, the seller gets the cash within three days while in the other case (the $129.27-million sale of 3.1 million Saputo shares at $41.70 a share) the seller will have to wait until Sept. 18. On the latter deal all the expenses were paid by the selling shareholder.
But there was one similarity between the two deals: National Bank Financial and BMO Capital Markets handled both transactions. NBF was top left.
As a result of the two secondary offerings, Jolina Capital retains a 8.4% stake in TransForce and a 33.7% stake in Saputo.
The reason for the different approaches between the two deals is that in the Saputo deal, Jolina is selling from a so-called control block, which typically kicks in when a shareholder owns at least 20%. (There are other tests in deciding whether the selling shareholder is deemed to exercise control.)
In general, it’s deemed that the owner of the control block has better access to material non-public information and should
be subject to certain resale restrictions. Hence the seller is required to file a prospectus.